John Kerry divests Canadian oil holdings to avoid conflict of interest

Lee-Anne Goodman, The Canadian Press
Published Wednesday, January 23, 2013 6:28PM EST
Last Updated Thursday, January 24, 2013 7:42AM EST

WASHINGTON -- John Kerry and his wife have agreed to divest holdings in a Canadian oil company, as well as dozens of other investments, in an effort to avoid conflicts of interest as the Massachusetts senator prepares to become America's next secretary of state.

The Canadian Press reported last week that Kerry had as much as US$750,000 invested in Suncor, a Calgary-based oil company whose CEO has urged the Obama administration to greenlight TransCanada's Keystone XL pipeline.

But federal ethics officials, acting independently of the White House, have determined the Suncor (TSX:SU) stock poses no conflict of interest threats. Kerry has also agreed to divest of as much as $31,000 in Cenovus Energy -- another Calgary firm that has pushed for Keystone XL approval --within 90 days if he's confirmed secretary of state.

Financial disclosure records show that Kerry and his wife, Heinz ketchup heiress Teresa Heinz Kerry, hold a vast array of international investments that could have placed the senator in an ethical quandary at the State Department.

Kerry's office said last week that many of those investments were in family trusts managed by an independent trustee, and that the senator was unaware of the contents. The senator is one of the wealthiest lawmakers on Capitol Hill with an estimated net worth of $193 million.

The investments nonetheless raised alarm bells among American environmentalists given the State Department will make a decision this year on the fate of the Keystone pipeline. Kerry is expected to breeze through his Senate confirmation hearings on Thursday.

"I am committed to the highest standards of ethical conduct for government officials," Kerry wrote in the agreement with the State Department's ethics office earlier this month.

"I will not participate personally and substantially in any particular matter that has a direct and predictable effect on my financial interests or those of any person whose interests are imputed to me, unless I first obtain a written waiver."

Environmentalists had called on Kerry last week to divest of all his holding in the Canadian oil companies.

Keystone is back on the hot seat in the U.S. capital this week, in part because President Barack Obama spoke out on the need to confront climate change in his second inaugural address on Monday.

The president's forceful repudiation of climate change skeptics has prompted the U.S. environmental movement to urge the president to back up his rhetoric by nixing Keystone XL, the $7 billion project that would carry bitumen extracted from Alberta's carbon-intensive oilsands to the U.S. Gulf Coast.

"We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations," Obama said on Monday.

"Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, and crippling drought, and more powerful storms."

White House press secretary Jay Carney has faced tough questions this week about whether those remarks bode badly for Keystone and what precisely Obama intends to do on the climate change front.

Kerry's longtime devotion to environmental issues is also making pipeline proponents nervous.

The senator has long been one of the most fierce climate hawks on Capitol Hill, leading unsuccessful efforts three years ago to push greenhouse gas legislation through Congress.

As secretary of state, he'll have to decide whether approving the pipeline is in the national interest of the United States.

In the aftermath of Obama's inaugural address, 53 senators -- more than half in the upper chamber -- sent the president a letter on Wednesday urging him to approve Keystone XL.

Their bipartisan letter was sent a day after Nebraska Gov. Dave Heineman, previously an opponent of the pipeline, said he was satisfied that TransCanada's (TSX:TRP) altered route for the pipeline skirts an environmentally fragile region of his state.

"Because (Keystone XL) has gone through the most exhaustive environmental scrutiny of any pipeline in the history of this country and you already determined that oil from Canada is in the national interest, there is no reason to deny or further delay this long-studied project," wrote the senators, lead by Republican John Hoeven and Democrat Max Baucus.

"Nebraska has now addressed the outstanding concerns you raised when you denied the permit, and we therefore urge to finish expeditiously the review process and approve the pipeline."

Obama raised concerns about the pipeline's original path when he rejected TransCanada's application last year.

Gary Doer, Canada's ambassador to the United States, said the secretary of state must make a Keystone decision based on facts, not emotion.

"The bottom line is, whether it's Hillary Clinton or John Kerry at the State Department -- they have the reports," Doer said Wednesday. "Is this in the national interest of the United States? That's the question."